Up to 5 April 2018, certain payments in lieu of notice were not taxable, primarily, those not contractually required to be made.

This is no longer the case.

Employers will now need to pay Income Tax and Class 1 National Insurance contributions (NICs) on an element of all termination payments from 6 April 2018, whether or not they are contractual payments.

The element that is now chargeable to Income Tax and NICs is the amount of the termination payment that represents payment in lieu of notice (PILON). This change applies to payments, or benefits received on, or after, 6 April 2018 in circumstances where the employment also ended on, or after, 6 April 2018. This follows an announcement at Budget 2016 that government would introduce rules to prevent employers from manipulating the system.

This measure is intended to bring fairness and clarity to the taxation of termination payments by making it clear that all PILONs, rather than just contractual PILONs, are taxable earnings.

All employees will pay Income Tax and Class 1 NICs on the amount of basic pay that they would have received if they had worked their notice in full, even if they are not paid a contractual PILON.

This means the tax and NIC consequences are the same for everyone and are no longer dependent on how the employment contract is drafted or whether payments are structured in some other form, such as damages.

Now that Wales and Scotland have devolved powers for taxation purposes, residents that live and work in the border areas with England have more planning options.

Wales have their own stamp duty regime from April 2018, the Land Transaction Tax (LTT), and Scotland, from April 2015, the Land & Building Transaction Tax (LBTT). Scotland have devolved powers to set their own rates of Income Tax.

Regarding property purchases, this can create interesting differences for individuals buying in the border areas of Wales/England and Scotland/England. For example:

Consider Llanymynech, a village that straddles the border between Powys (Wales) and Shropshire (England). The amount of stamp duty payable on an identically priced house, say £179,000, would cost the buyer £1,080 in Stamp Duty Land Tax if bought in the English side of the village, but no Land Transaction Tax would be payable for an equivalently priced house on the Welsh side of the village. A definite incentive to buy in this price bracket the Welsh side of the border.

If you live in the Scotland/England border areas and you are contemplating the purchase of an expensive property and your budget is £1m, you may want to consider the following numbers:

• Buying in Scotland would cost you £78,350 in Land & Building Transaction Tax, and
• Buying in England would cost you a mere £43,750 in Stamp Duty Land Tax.

Scotland has also set its own Income Tax rates for 2018-19. So, depending on the amount of your income, you may pay variable rates of Income Tax depending on which side of the border you choose to live.

Legislation has been introduced to reduce the present maximum six-day clearance process, to just one day.

Banks presently send the payer’s cheque to the clearing banks to facilitate clearance. Under new rules, that will apply from October 2018, this will be reduced to one-day by sending a digital image of the cheque for clearance. To do this, banks will use a common Image Clearing System (ICS).

This should all but eliminate the present, confusing process where cheques are debited to your statement but may not be cleared to draw against for days.

Following consultation with interested parties HM Treasury have agreed that customers have the right to a copy their cheque, together with other useful information.

For those interested in the detail of their response HM Treasury said:

In 2015, HM Treasury introduced measures in the Small Business, Enterprise and Employment Act to allow UK banks and building societies to introduce the Image Clearing System (ICS) for cheques. ICS is an innovation that cuts down cheque clearing times from a possible six days to one day by sending a digital image of the cheque for clearing, rather than the paper cheque itself.

In November 2017, HM Treasury consulted on proposals to make provision for two measures in secondary legislation to support the introduction of the ICS:

• That a copy of a paid cheque (or other paper instrument), along with some additional information, be provided to the payer upon his or her request, and that the copy can be used as evidence of payment
• That if a customer paying using a cheque incurs a loss in connection with the presentment of a cheque under the ICS (that did not result from gross negligence or fraudulent activity on their part), and has not received compensation, the payee’s bank must compensate this customer for this loss. If the paying bank incurs a loss (in the event they have already paid out compensation to the customer) the payee’s bank must compensate the payer’s bank.

The aim of the proposed legislation is to ensure that the ICS, which will clear all cheques by October 2018, has no detrimental impact on the existing position of cheque users.

The Government has considered these representations and …, upon request, paying banks will have to provide a copy of the cheque together with:

• confirmation of the decision of the banker that the payment should be made (including automated decisions); the date that the decision was made (or the date upon which the automated decision was made);
• the value of the payment made;
• the sort code and account number of the paying customer (drawer of the cheque);
• any reference number allocated by the banker authorised to collect payment of the instrument (used to identify the payment instrument).

This will ensure that customers have the right to a copy of their cheque, together with useful information, while minimising the burden on industry.

Businesses that are still receiving cheque settlement of their invoices will be pleased by this announcement as it effectively reduces the credit they are obliged to give customers by up to one week.

For those of us who are reluctant to see our home address on publicly available websites such as that provided by Companies House, they will be pleased by a recent change to data suppression laws. This should help you remove your home address from publicly available company documents in certain cases.

Companies House have announced:

The law has been changed to make it easier to remove your home address from the company register. This applies to company directors and others such as secretaries, people with significant control and LLP members, whose home address is publicly available on company documents.

To remove your home address, you can apply at a cost of £55 for each document you want to suppress.

You must provide an alternative correspondence address if you are still appointed to a live company, such as a current director. This will replace your home address on the public register.

If you are no longer appointed to a company, you do not need to provide an alternative address. Instead, only the first half of your postcode will be available to the public.

You cannot use this process to remove a home address if you have used it as a company’s registered office.

If you would like to take advantage of this facility you can wade through the Companies House Guidance on their website, search for “Restricting the disclosure of your information”. Or we can discuss your options and deal with the paperwork for you.

According to government sources HMRC are asking online market places to sign an “agreement” to keep their users the right side of the law. In a recent announcement HMRC said:

“… the agreement will help online market place platforms meet their responsibility to ensure their sellers understand the tax rules, and prevent fraud taking place on their watch.”

We assume that the intention is to discourage users setting up shop and avoiding their VAT dues by avoiding registration.

An online marketplace is defined in VAT legislation as a website, or any other means by which information is made available over the internet, through which persons other than the operator can offer goods for sale (whether the operator also does so).

Since the 25 April 2018, HMRC is asking all online marketplaces operating in the UK to sign an agreement to help tackle online VAT fraud and errors taking place on their platforms.

Online marketplaces have transformed the way people shop and helped millions of businesses to sell their products and services.

As far as HMRC are concerned, the platforms have a responsibility to ensure their sellers understand the tax rules and prevent fraud from happening on their watch.

The agreement asks online marketplaces to commit to:

• educating online sellers from the UK and abroad about their VAT obligations in the UK either via their own help and support or by directing them to HMRC’s GOV.UK guidance;
• responding swiftly when notified by HMRC that sellers are not playing by the VAT rules, and setting up a system to take appropriate action; and
• finding a suitable and lawful way to provide HMRC with information about their sellers, when requested.

The last bullet point is interesting. We assume that “lawful” alludes to the data protection rules as eBay, and the like, would be required to share the personal data of their customers to comply? Will the market places be obliged to “report” their customers in some sort of de facto Money Laundering Reporting obligation?

Can’t help wondering if HMRC are shifting their workload, their eyes and ears, elsewhere?

Be interesting to see if the market place organisations will comply. Apparently, the only down side to not complying is that HMRC will not publish their name on a list of platforms that have signed the agreement.

However, about 27,550 applications to register for VAT from overseas online retail businesses have been made since HMRC started to become active in dealing with this issue. This compares with about 1,650 for 2015.